Summary
Advanced Micro Devices, Inc. (AMD) reported its financial results for the second quarter and the first six months ending June 29, 2019. The company experienced a decrease in net revenue for both periods compared to the prior year, primarily driven by declines in the Computing and Graphics segment due to lower graphics channel memory sales and reduced demand for Radeon channel products. While the Enterprise, Embedded and Semi-Custom segment also saw a revenue decrease, it was partially offset by higher EPYC server processor sales. Despite the revenue decline, AMD saw an improvement in its gross margin percentage to 41% from 37% in the prior year, attributed to higher sales of Ryzen and EPYC processors which carry higher gross margins. Operationally, R&D expenses increased slightly, while Marketing, General and Administrative expenses saw a significant rise. The company managed to reduce interest expense due to lower debt balances. The balance sheet shows an increase in cash and cash equivalents, though overall cash and marketable securities decreased slightly from year-end. Financially, AMD reported net income of $35 million for the quarter and $51 million for the six months, down from $116 million and $197 million respectively in the prior year. The company ended the period with $1.13 billion in cash, cash equivalents, and marketable securities and has access to a $500 million secured revolving credit facility, which it believes is sufficient to fund operations over the next 12 months. Significant litigation remains ongoing, though the company believes potential liabilities will not have a material adverse effect.
Financial Highlights
50 data points| Revenue | $1.53B |
| Cost of Revenue | $910.00M |
| Gross Profit | $621.00M |
| R&D Expenses | $373.00M |
| SG&A Expenses | $189.00M |
| Operating Income | $59.00M |
| Interest Expense | $25.00M |
| Net Income | $35.00M |
| EPS (Basic) | $0.03 |
| EPS (Diluted) | $0.03 |
| Shares Outstanding (Basic) | 1.08B |
| Shares Outstanding (Diluted) | 1.11B |
Key Highlights
- 1Net revenue decreased by 13% for the quarter ($1.53 billion vs $1.76 billion) and 18% for the six months ($2.80 billion vs $3.40 billion) compared to the prior year.
- 2Gross margin percentage improved to 41% for both periods, up from 37% in the prior year, driven by higher-margin Ryzen and EPYC processor sales.
- 3Operating income decreased significantly, falling to $59 million for the quarter (from $153 million) and $97 million for the six months (from $273 million).
- 4Net income declined substantially, to $35 million for the quarter (from $116 million) and $51 million for the six months (from $197 million).
- 5Research and Development expenses increased by 4% for the quarter and 7% for the six months, indicating continued investment in product development.
- 6Marketing, General and Administrative expenses increased by 33% for the quarter and 30% for the six months, reflecting increased go-to-market activities.
- 7The company exercised a new $500 million secured revolving credit facility, with no outstanding borrowings as of June 29, 2019, and holds $1.13 billion in cash, cash equivalents, and marketable securities.